On May 19, 2015, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) filed a complaint and proposed consent order against PayPal, Inc. and its subsidiary Bill Me Later, Inc. (collectively, “PayPal”) in the U.S. District Court for the District of Maryland. If approved by the court, the settlement will require PayPal to pay $15 million in redress to consumers and a $10 million civil money penalty. Although the case is not the largest settlement in CFPB history, it is interesting for at least two reasons: (1) it sheds important new light on the meaning of “abusive” acts and practices, which is slowly being defined through the CFPB’s enforcement actions; and (2) it continues a recent trend of filings in federal court instead of in an administrative proceeding.
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Nicholas F. B. Smyth is a member of Reed Smith’s Financial Industry Group, in the Pittsburgh and Washington, D.C., offices. Nick advises clients on examinations and investigations by the CFPB and other bank regulators. He can also advise clients on investigations and can represent them in litigation with the FTC, DOJ, and state attorneys general. Prior to joining Reed Smith, Nick spent four years as an Enforcement Attorney at the CFPB and a year at the U.S. Treasury Department, where he helped draft the statute that created the CFPB.